Correlation Between Samsung Electronics and Celltrion Pharm
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Celltrion Pharm at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Samsung Electronics and Celltrion Pharm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Celltrion Pharm, you can compare the effects of market volatilities on Samsung Electronics and Celltrion Pharm and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Samsung Electronics with a short position of Celltrion Pharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Celltrion Pharm.
Diversification Opportunities for Samsung Electronics and Celltrion Pharm
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Celltrion is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Celltrion Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celltrion Pharm and Samsung Electronics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Samsung Electronics Co are associated (or correlated) with Celltrion Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celltrion Pharm has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Celltrion Pharm go up and down completely randomly.
Pair Corralation between Samsung Electronics and Celltrion Pharm
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Celltrion Pharm. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 2.19 times less risky than Celltrion Pharm. The stock trades about -0.21 of its potential returns per unit of risk. The Celltrion Pharm is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 5,250,000 in Celltrion Pharm on September 26, 2024 and sell it today you would earn a total of 990,000 from holding Celltrion Pharm or generate 18.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.65% |
Values | Daily Returns |
Samsung Electronics Co vs. Celltrion Pharm
Performance |
Timeline |
Samsung Electronics |
Celltrion Pharm |
Samsung Electronics and Celltrion Pharm Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and Celltrion Pharm
The main advantage of trading using opposite Samsung Electronics and Celltrion Pharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Celltrion Pharm can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Celltrion Pharm will offset losses from the drop in Celltrion Pharm's long position.Samsung Electronics vs. LG Corp | Samsung Electronics vs. Zinus Inc | Samsung Electronics vs. Humasis Co | Samsung Electronics vs. JYP Entertainment |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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